You want to ensure your company's growth and improve its profitability. Customer acquisition cost allows you to measure the effectiveness of your marketing and sales investments.
Loyal customers spend 67% more than new customers.
Acquiring a new customer often costs six times more than retaining an existing one.
A 10% increase in customer satisfaction can increase profitability by 30%.
By understanding this indicator, you can make better decisions for your business.
Key points
Customer acquisition cost (CAC) measures the investment required to convert a prospect into a customer.
Acquiring a new customer often costs six times more than retaining an existing one.
A 10% increase in customer satisfaction can increase profitability by 30%.
Use the formula CAC = (Marketing expenses + Sales expenses) / Number of new customers to evaluate your efforts.
Controlled acquisition costs preserve your profit margin and avoid unnecessary expenses.
Identify profitable channels by calculating the CAC for each acquisition method.
Improve your conversion rate by personalizing the customer experience and optimizing your website.
Referral marketing can reduce your customer acquisition cost by turning your satisfied customers into brand ambassadors.
Definition of acquisition cost
Concept and calculation of acquisition cost
Customer acquisition cost (CAC) represents the investment you need to make to convert a prospect into a customer. You must add up all the costs associated with marketing and sales activities. Then, you divide this sum by the number of new customers acquired over a given period. This method gives you a clear picture of the effectiveness of your efforts to attract new customers.
The formula for customer acquisition cost is simple:
CAC = (Marketing expenses + Sales expenses) / Number of new customers
In the B2B sector, you need to take several elements into account:
Sales costs (SC): expenses to convert prospects into customers.
Marketing costs (MC): investments to attract new customers.
Customer acquisition (CA): number of new customers over the period studied.
Here's a concrete example. If you spend €20,000 on marketing and €10,000 on sales activities to acquire 500 new customers, your customer acquisition cost will be:
(20 000 € + 10 000 €) / 500 = 60 €
This way you can know how much each new customer actually costs you.
Difference with other indicators
You need to distinguish customer acquisition cost from other key performance indicators (KPIs). Customer acquisition cost measures the price to acquire a new customer, while other KPIs help you analyze profitability and customer loyalty.
The main indicators to compare are:
Customer lifetime value (LTV)
Revenue generated by new customers
The conversion rate at each stage of the customer journey
You also need to look at media, marketing, sales and promotional costs to get a complete picture.
Here are some important differences:
Acquiring a new customer often costs five times more than retaining an existing one.
Improving your retention rate by just 5% can increase your profits by 25 to 95%.
You succeed in making a sale to an existing customer in 60 to 70% of cases, whereas for a new customer, this rate drops to 5 to 20%.
By understanding these differences, you can better analyze your investments and choose the best strategy for your business.
Why calculate the acquisition cost?
Evaluate the effectiveness of investments
You want to know if your marketing and sales spending is truly delivering results. Customer acquisition cost (CAC) gives you a precise measurement for each new customer acquired . You can compare this figure with your objectives and see if your investments are effective.
Here's what you can evaluate using this metric:
You measure the performance of your sales teams.
You know if your marketing campaigns are profitable.
You can adjust your budget to maximize your results.
Tip: Controlled acquisition costs allow you to preserve your profit margin and avoid unnecessary expenses.
Identify profitable channels
You use several channels to attract customers: online advertising, social media, SEO, and referrals. Calculating the cost per acquisition for each channel helps you identify the most effective ones.
A profitable channel allows you to acquire more customers for less money. You can then focus your efforts on these channels and reduce spending on those that are too expensive.
Indicator | Details | Implications for marketing investments |
|---|---|---|
CLV:CAC Ratio | Ideally 3:1 | If the CAC exceeds the CLV, the business is not viable, you need to review your strategy. |
Recommended methods | SEO, referrals (e.g., €10 discount per successful referral) | Prioritize these methods to reduce CAC and improve profitability. |
You can also track the average cost to convert a prospect into a customer on each channel. This helps you direct your investments towards the most profitable methods.
Planning for Growth
You want to grow your business and acquire more customers. Customer acquisition cost helps you plan your budgets and set realistic goals.
Knowing this figure allows you to:
Develop projected budgets tailored to your growth strategy.
Adjust your marketing actions in real time based on the results obtained.
Quickly identify if an acquisition technique is becoming too expensive.
A high customer acquisition cost can indicate that your methods are not optimized. You can then test new approaches or improve your processes to attract more customers without increasing your expenses.
Note: Quantifying the effectiveness of your marketing actions allows you to adjust your strategy and ensure the profitability of your business.
Method for calculating acquisition cost
CAC formula
To calculate the customer acquisition cost, you need to follow a specific method. You start by adding up all marketing and sales expenses over a defined period. You choose a reference period, for example, a quarter or a year. Then, you count the number of new customers acquired during that period. You apply the following formula:
CAC = (Marketing expenses + Sales expenses) / Number of new customers
Here are the steps to follow :
Add up all marketing expenses incurred during the chosen period.
Excludes indirect costs that do not relate to the direct acquisition of customers.
Specify the reference period.
Determines the number of new customers acquired.
Apply the formula to obtain the result.
Analyze the figure obtained to understand the performance of your actions.
This method gives you a clear view of the amount invested for each customer acquired.
Taking costs into account
You need to include several elements in the calculation. Experts recommend taking into account:
Advertising spending , both online and offline.
The salaries of the sales teams involved in the acquisition.
Marketing tools and software, such as CRM platforms.
Recruitment costs for team members responsible for acquisition.
You should avoid including indirect costs, such as overhead or expenses that don't directly contribute to attracting new customers. This detail helps you obtain a reliable and useful figure.
Calculation tools
To save time and avoid mistakes, you can use specialized digital tools. Several solutions exist to automate the calculation of the acquisition cost:
Magileads
HubSpot
Klaviyo
ActiveCampaign
Mailchimp
These platforms allow you to centralize your data, track your spending, and automatically calculate your customer acquisition cost. You can also segment your customers, personalize your campaigns, and analyze the performance of each channel.
Here is a concrete example to illustrate the method:
An e-commerce company spends 4,000 euros on advertising campaigns.
She invests 1,000 euros in marketing tools.
It acquired 100 new customers during the period.
The calculation is simple: (4,000 + 1,000) / 100 = 50 euros per customer.
You can then compare this figure to the customer lifetime value to determine if your model is profitable.
Interpreting the acquisition cost
Analysis of a high or low CAC
You need to know if your customer acquisition cost is high or low. To do this, you compare this figure to the customer lifetime value (CLV) . If your cost exceeds the value each customer generates, you risk losing money. Here are the criteria to consider:
Cost per acquisition (CPA) shows you how much you spend for each new customer.
Return on ad spend (ROAS) helps you see if your campaigns are profitable.
You also need to look at the profit margin on each product sold.
A low customer acquisition cost indicates that your marketing efforts are working well. A high cost may signal a problem with your campaigns or sales process. You should then review your methods or test new channels.
Tip: Always compare your acquisition cost to the average customer value to determine if your model is viable.
Tracking over time
You need to track your customer acquisition cost over several months. This tracking allows you to identify trends and anticipate changes. Here's what you can do:
Allocate more budget to the channels that bring in the most customers.
Optimize your conversion rate at every stage of the buying journey.
Create targeted content to attract qualified leads.
Set up a referral program to reduce your costs.
Work on customer loyalty to increase customer lifetime value.
Regular monitoring helps you adjust your strategy and remain profitable, even if the market changes.
Comparison with profitability
To determine if your business is profitable, you need to compare the customer acquisition cost to the customer lifetime value (CLV). The ideal ratio is 1:3. This means that every euro invested to acquire a customer should generate at least three euros in revenue over the lifetime of the relationship.
Indicator | Goal to achieve | Why this is important |
|---|---|---|
CAC/CLV | 1:3 or better | Ensure the profitability of your business |
ROAS | Greater than 1 | Guarantees a positive return on advertising |
CPA | Below the CLV | Avoid spending more than you earn |
In some cases, the CLV can be much higher, especially if you're working with strategic accounts. You can then accept a higher acquisition cost, as profitability remains assured in the long term.
Tip: Check this ratio regularly to ensure your business stays on track.
Optimize acquisition costs
Improve conversion
You want to reduce customer acquisition costs and increase the number of customers. To do this, you need to improve your conversion rate. Several levers exist to achieve this. Here's what you can implement:
Segment your audiences for more targeted campaigns .
Personalize the customer experience to increase the chances of conversion.
Improve the UX of your website to facilitate the purchasing process.
Perform A/B testing to identify the best-performing versions of your pages.
Uses chatbots to quickly answer simple questions from visitors.
Tip: A high conversion rate allows you to acquire more customers without increasing your advertising budget.
Market research shows that improving your conversion rate remains one of the most effective ways to optimize your results . This allows you to acquire new customers while controlling your expenses.
Automate processes
Process automation saves you time and reduces costs. You can automate your marketing campaigns, customer relationship management, and lead tracking. Here are the main benefits:
You improve the effectiveness of your campaigns.
You optimize the management of your existing clients.
You can more easily identify opportunities within your customer base.
You facilitate customer loyalty, which reduces the cost of acquisition.
Your sales teams are focused on acquiring new customers.
Tip: Automation allows you to track each prospect, send personalized messages, and analyze results in real time.
By automating your processes, you make your actions more efficient and reduce repetitive tasks. This allows you to invest your time in high-value activities.
Targeting the right channels
Your choice of acquisition channels directly impacts your customer acquisition cost. You need to identify profitable segments and exclude unqualified audiences. Precise targeting allows you to tailor your messaging to each segment and improve your conversion rates. Here's what you should monitor:
Identifies the segments that generate the most customers.
Tailor your messages for each target group.
Analyze the bounce rate on your campaigns. A high bounce rate indicates a poor fit between your message and the audience's expectations.
Example: If you observe a bounce rate of 80% , this means that 80% of your advertising budget is spent on visitors who immediately leave your site. On a budget of €10,000, this represents a potential waste of €8,000.
By targeting the right channels, you invest your budget where it's most effective. You reduce unnecessary expenses and increase the number of customers acquired.
Referral marketing
Referral marketing allows you to leverage customer satisfaction to attract new customers. You encourage your current customers to talk about your business to their network. This method is also known as digital word-of-mouth. It remains one of the most powerful ways to reduce your customer acquisition cost.
Tip: A satisfied customer recommends your business to an average of three people. This allows you to increase your customer base without increasing your advertising expenses.
Here's what you need to know about referral marketing:
You create a simple referral program. For example, you offer a discount or a gift to each customer who refers a friend.
You make it easier to share opinions on social media or on your website.
You ask your customers to leave a testimonial after their purchase.
You thank each client who brings you a new contact.
Referral marketing works because people trust their friends and family. A positive review has more impact than traditional advertising. You gain new customers at a lower cost.
Advantages of referral marketing | Impact on acquisition cost |
|---|---|
Acquisition of qualified customers | Reduction in the marketing budget |
Retaining existing customers | Increase in conversion rate |
Viral effect on social media | More free visibility |
To implement an effective program, you must:
Define a clear reward for both the sponsor and the sponsored individual.
Explain the rules simply.
Promote the program on all your channels (website, email, social networks).
Monitor results and adjust rewards as needed.
Note: Tools like Magileads help you track recommendations and automate rewards.
You can also organize contests or challenges to motivate your customers to share your offer. The simpler you make the process, the more your customers will participate.
Referral marketing allows you to turn your customers into brand ambassadors. You reduce your customer acquisition cost while increasing trust in your brand. This creates sustainable and profitable growth.
Case studies and examples
SMEs and CAC optimization
Want to know how French SMEs have managed to optimize their acquisition costs? Here are several concrete examples that show the strategies used:
An equestrian accessories brand opted for advanced behavioral targeting. It segmented its Meta Ads campaigns based on purchase intent. This method reduced spending by 27% per add-to-cart .
A B2B SME implemented a scripted email nurturing sequence. Five messages were sent to prospects during specific events. The conversion rate increased from 18% to 31% in three months, which reduced the number of cold leads.
An agricultural software publisher replaced physical trade shows with interactive online seminars. Live demonstrations saved €40,000 in logistics costs and reduced the acquisition cost by double digits.
A vegan brand and a wellness subscription box startup launched a co-marketing campaign. They swapped their subscriber databases. This initiative generated 2,000 new customers at an acquisition cost of just €4.
Tip: You can use these examples as inspiration to adapt your own campaigns and test new approaches.
Results after optimization
When you optimize your acquisition cost, you see direct impacts on your company's profitability and growth. Here's what you can learn from the experiences of several SMEs:
Reducing the cost of acquisition improves the return on investment of marketing and sales campaigns.
Excessive costs often indicate poor resource allocation and can harm profitability.
By focusing on the highest-performing channels, you use your budget more efficiently and promote growth.
Customer lifetime value must always cover acquisition costs to ensure the viability of your model.
You can also learn from specific cases:
GlowNature integrated customer reviews into its emails. Its customer acquisition cost dropped from €22 to €16 . Prospect confidence increased, as did the conversion rate.
DataSecure, a SaaS SME, reallocated its budget towards online seminars. Its customer acquisition cost fell from €1,200 to €780, and customer lifetime value increased by 20%.
ShoesForAll adjusted the frequency of its digital advertising. It reduced its costs while maintaining sales volume.
Business | Main action | CAC before | CAC after | Key result |
|---|---|---|---|---|
GlowNature | Customer reviews in emails | 22 € | 16 € | + conversion rate |
DataSecure | Interactive webinars | 1 200 € | 780 € | + 20% LTV |
ShoesForAll | Adjusting the frequency of advertisements | pupil | reduced | Sales volume maintained |
Note: You should always compare the acquisition cost to the customer lifetime value to ensure that your optimization efforts support profitability in the long term.
Mastering customer acquisition cost allows you to ensure your company's long-term profitability. You must track and optimize this cost with appropriate tools, such as marketing automation and loyalty programs. Regularly monitor the CAC/CLV ratio to ensure that each customer generates more revenue than they cost.
Monitoring acquisition costs helps you adjust your strategies.
Customer loyalty and increased average order value maximize the value of each customer.
Regular monitoring of the CAC/CLV protects your profitability, even in highly competitive sectors.
FAQs
What is customer acquisition cost (CAC)?
Customer acquisition cost represents the amount you invest to convert a prospect into a customer. You add up your marketing and sales expenses, then divide by the number of new customers.
What should you include in the CAC calculation?
You must include:
Advertising spending
Sales team salaries
The marketing tools used
Costs related to direct customer acquisition
What is the purpose of the CAC in your company?
The CAC helps you measure the effectiveness of your investments. You can compare this figure to the customer lifetime value to see if your model remains profitable.
What is the difference between CAC and CLV?
CAC measures what you spend to acquire a customer. CLV (Customer Lifetime Value) indicates what each customer brings to your business over the entire duration of the relationship.
What is the ideal ratio between CAC and CLV?
You should aim for a 1:3 ratio.
This means that every euro invested to acquire a customer should bring you at least three euros over time.
What should you do if your CAC is too high?
You need to analyze your acquisition channels, optimize your campaigns, and improve your conversion rate. You can also automate certain processes to reduce costs.
What tools can help you track your CAC?
Tool | Main function |
|---|---|
Magileads | Calculation and monitoring of the CAC |
HubSpot | Performance Analysis |
Mailchimp | Campaign management |
See also
Time Required to Acquire New Customers
Effective Strategies for Identifying New Customers
Ten Techniques to Attract Potential Clients
